(The Center Square) – A new report shows Illinois’ state budget in 2021 depended heavily on the federal government.
According to the Pew Research Center, thanks to an sizable boost in federal aid during the pandemic, from Medicaid support to funds to combat COVID-19, federal funds accounted for over 31% of the Illinois state budget in fiscal year 2021.
Nationally, 37.7% of state’s revenue came from federal dollars, up from 35.9% the previous year.
“I think we would have seen even a higher share had it not been for state revenues bouncing back quite so quickly,” said Rebecca Thiess, a manager for the Fiscal Federalism Initiative at Pew.
Multiple factors helped state tax collections increase by 19.4% in fiscal 2021 compared to a year earlier. Fueling the spike was the shift in personal spending from usually untaxed services to purchases of goods, which are taxable in a majority of states.
From March 2020 to March 2021, the federal government awarded states more than $800 billion in COVID-19 relief, more than double the amount of aid it doled out in response to the Great Recession of 2007-2009.
Thiess said the federal share of state revenue is expected to remain elevated through fiscal 2024, partly because of the American Rescue Plan Act.
“We do anticipate that along with other federal funds including in the Infrastructure Investment and Jobs Act and other legislation that we will see the increase to continue on a temporary basis,” Thiess said.
The top three states with the largest share of revenue from federal funds in fiscal ‘21 were Alaska (57.2%), Louisiana (53.6%) and Montana (51.5%).
The states with the smallest share included Utah (27%), California (27.8%) and New Jersey (29.3%).
